Transcript The Supply Chain Simulation Game
2012 Utah Operations Winter Conference
The Supply Chain Simulation Game
Gal Raz Darden School of Business, University of Virginia
Supply Chain Management Elective
Jan 18 (Wed) Introduction to Supply Chain Management Feb 2 (Thu) Sourcing from an Ops / People Perspective (K&S China (B)) Feb 23 (Thu) The Supply Chain Game – Part 2 Jan 19 (Thu) Supply Chain Network Design (K&S) Feb 8 (Thu) No Class Feb 24 (Fri) The Supply Chain Game – Debrief Jan 25 (Wed) Data Rich Management (SEJ) Feb 15 (Wed) Jan 26 (Thu) Outsourcing and Offshoring (Timbak2) Feb 16 (Thu) Aligning Incentives in Supply Chains (Blockbuster) The Negotiations Exercise (Uncle Coco Magic shop) Feb 1 (Wed) Sourcing from an Ops / People Perspective (K&S China (A)) Feb 22 (Wed) The Supply Chain Game – Part 1 Mar 1 (Wed) Recycling and Reverse Logistics (Sandvik) Mar 8 (Wed) Green Product Service Systems (Netafim) Mar 9 (Thu) Green Product Service Systems (Better Place) * The Negotiation Exercise on Thursday February 16 th and the Supply Chain Game on Wednesday and Thursday February 22-23 will be from 2:45pm to 4:45pm and thus there will be no class on February 8
The SC Simulation Game
Main Learnings
Managing a global supply chain that competes by making timely decisions of pricing, ordering, and logistics that impact both the market and competitors The impact of supply chain contracts on supply chain and individual firm performance Negotiation under asymmetric information Supply chain strategy (responsiveness versus efficiency)
The SC Simulation Game
Procedure
The game is played with competing teams of 4–8 players Each team has four roles: a Retailer, Wholesaler, Distributor, and Manufacturer The game is played for up to 96 weeks (2 simulated years)
The flow of product and orders
Customers Manufacturer Distributor Wholesaler Retailer
Manufacturing and transport takes 1 or 2 weeks.
Orders are received immediately
The Decisions
Weekly: Order quantity Mode of transportation (trucks vs planes) Quarterly: Retail Price Half Yearly: Supply Chain Contract Negotiations (Revenue Sharing or Wholesale Pricing Contracts) Information System
The SC Game Interface
Retailer Screen
The SC Game Interface
Distributor Screen
Contract Screen (RS Contract)
1 2
Quarterly Reports
The SC Game Debrief
Market Strategy – Pricing and market share Supply Chain Strategy – Ordering, using fast mode of transportation (Responsiveness vs efficiency), coordinated ordering The Supply Chain Contract Wholesale pricing contract Revenue sharing contract Use of Information Sharing Individual vs Supply Chain Profit
Market Strategy
Retail Price
$300 $250 $200 $150 $100 $50 0 1 2 3 4
Quarter
5 6 7 Team 1 Team 2 Team 3 Team 4 8
Market Share
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0 1 2 Team 1 Team 2 Team 3 Team 4 3 4
Quarter
5 6 7 8
Supply Chain Strategy
Order
150 000 120 000 90 000 60 000 30 000 0 0 20 40
Quarter
60
Team 1
Customer Retailer Wholesaler Distributor Manufacturer
Order
200 000 160 000 120 000 80 100 80 000 40 000 0 0 Customer Retailer Wholesaler Distributor Manufacturer 20 40
Quarter
60
Team 3
80 100
The Supply Chain Contract
Revenue-Sharing contract versus Wholesale Pricing contract What is the goal and impact of the revenue sharing contract? What is the optimal revenue sharing contract?
What is the impact of the Asymmetric Information?